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Informer

A Whole Lot of Wind

Securities & Exchange Commission Rule 144 allows owners of unregistered stock to sell such shares under strict conditions, including getting a lawyer's blessing. An Internet search for "Rule 144 opinion letter" leads to lawyer Michael D. Spadaccini's pitch of a "24-hour turnaround" for $275. A federal judge just ordered him and a firm he owns to pay $28,000 in damages, interest and penalties. The claim: He violated securities law by selling (at 5 cents each) 235,000 unregistered shares, received as a legal fee, in U.S. Wind Farming, a co-defendant that settled with the SEC. Spadaccini, who writes business law books and runs law Web sites, says he has appealed. --Daniel Fisher and William P. Barrett

Which Rhymes with HYPE

Since June 2006 split-adjusted shares of Century Petroleum have rocketed from 51 cents to $2.16, giving rise to a $138 million market cap. Some points found in filings by the Woodlands, Tex. company: (a) no oil and gas produced yet, (b) no revenue, (c) a going-concern warning and (d) no employees other than directors and officers. Century, which in its publicity calls itself "dynamic," says it would welcome extraction under its Louisiana exploratory lease of "gold, silver, zinc [or] copper," although the firm calls such prospects "unlikely." There's upside but also uncertainty, says boss James B. Hersch. The stock trades under the symbol CYPE. --Matthew Rand

Island Hopping

Chicago investor David L. Hokin is in U.S. Tax Court fighting a $35 million back-tax-and-penalties bill from the Internal Revenue Service, which says he wrongly claimed residency for 2002 in the Pacific's lower-tax Northern Mariana Islands. His lawyer, Robert McKenzie, calls the IRS bill, based on $68 million in taxable income, "inflated." He says Hokin moved for family reasons to the U.S. commonwealth in 2000 after selling his Illinois house, returning a few years later. In 2004 Congress tightened Mariana residency rules. Hokin is chief investment officer of DH2, which gained notice for hiring now jailed lobbyist Jack Abramoff and unsuccessfully suing federal regulators to block rules limiting profits from market timing of mutual funds. --Janet Novack

Option That Ruling

The Tax Court has upheld the IRS' denial of tax-exempt status for Families Against Government Slavery. The California outfit was founded by one Percy Roy Matthews II with the claimed educational purpose of exposing the "slavery and entrapment of Hollywood celebrities" by murderous federal agents, government officials and even gangs. Judge Stephen J. Swift's harsh review: "Unsupported opinion and distorted facts." --J.N.

All Follow the Money

A new academic paper suggests it pays for public companies to give to political campaigns. Using federal elections records to review 800,000 donations linked with 1,900 firms between 1984 and 2005, Michael J. Cooper, Huseyin Gulen and Alexei V. Ovtchinnikov calculate that political activity gave businesses a 3.6% increase in firm value. They speculate that their findings--which they characterized as "quite startling"--stem from the benefits of "politician-sponsored legislation." The researchers write that the strongest correlation was for contributions to home-state candidates, races for the House of Representatives and Democrats. --D.F. and W.P.B.